But the timing of the award by the Ministry of Energy and Water Resources of the first oil drilling permit for the territory almost on the eve of a visit by U.S. President Barack Obama to Israel is particularly controversial.

The drilling license given to the U.S.-Israeli company Genie Energy covers about half of the southern area on the volcanic plateau that Israel has occupied for nearly 50 years.

Israel annexed the southern part of the Golan in 1981, as it did the East Jerusalem, governed by Jordan until its conquest in 1967. But the United States and the world at large has never recognized those unilateral annexations. Syria still claims the Golan and demands its return.

Former Israeli Prime Minister Ehud Barak offered to relinquish most of the Golan in peace negotiations with Damascus in 1999-2000 but the talks fell through.

Syria is being torn apart by a 2-year-old civil war that shows no sign of ending.

The regime of President Bashar Assad is fighting for survival and is in no position to engage in new peace negotiations, even if it was so inclined.

Israel fears it could be dragged into the conflict but its most immediate concern is a move into the border region by Islamist rebels who seek to eradicate the Jewish state.

Giving the green light to oil exploration in what they view as Syrian land could provoke retaliation -- if not now, because of the need to press the war against Assad, then later if they succeed in toppling his minority regime.

It's not clear whether the prospect of the collapse of the Damascus regime was involved in the Israeli decision but if oil or natural gas is discovered in the Golan it could seriously jeopardize the territory's return to Syria.

The award was made more provocative by the fact that Genie Energy is headed by right-wing hard-liner and war hero Effie Eitam, who lives at the Moshav Nov settlement in the Golan.

Now a reserve brigadier general, Eitam was decorated for bravery fighting Syrian armor during the 1973 war when Syrian nearly pushed the Israelis off the strategic plateau.

In 2004 Eitam quit as minister for national infrastructure in the Likud government to protest Ariel Sharon's plan to abandon the Gaza Strip.

Israel stopped considering oil exploration on the Golan 20 years ago, hoping to induce Syria into peace negotiations that would include returning the Golan.

But in 2012 Israeli Energy Minister Uzi Landau decided to open the region after geological surveys indicated "a large potential oil discovery." That followed the discovery of major natural gas fields in the eastern Mediterranean that will transform Israel's traditionally energy-poor economy.

Israel's business daily Globes conceded that awarding Genie Energy the exploration license "could cause an international fracas, given the Golan's status as occupied Syrian territory under international law."

But it said "there was no known political intervention in the licensing process" while "the proximity of the event to Obama's upcoming visit is coincidental."

That remains to be seen. Relations between Netanyahu, who is stitching together a new coalition following Jan. 22 parliamentary elections, and Obama, who won a second term in November, have been severely strained in recent months.

This has largely been because of U.S. frustration over Netanyahu's failure to revive the almost-dead peace process with the Palestinians despite heavy prodding from Washington.

Netanyahu's new administration is likely to come under growing diplomatic pressure over its controversial decision to greatly expand Jewish settlements in the occupied West Bank.

The license award "is mostly political -- it's an attempt to deepen an Israeli commitment to the occupied Golan Heights," cautioned Israeli political analyst Yaron Ezrahi.

"The timing is directly related to the fact the Syrian government is dealing with violence and chaos and is not free to deal with this problem."

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